Legislation to spur entrepreneurship begins at the local effort

A few weeks ago, I watched a CNN story on Beattyville, Kentucky, a town ranked as the “poorest white town in America” from 2008-2012. Located 150 miles southeast of Louisville, Beattyville was once home to a booming coal industry.

Local citizens are hoping that their votes for President Trump — 81 percent supported him  — will bring back the jobs and prosperity that left town upon coal’s decline.

{mosads}The middle of our country is dotted with cities and towns like Beattyville, where major industries have all but disappeared and residents watch from the sidelines as Silicon Valley and New York talk about the progress that innovation brings.

But as critical as President Trump’s agenda and any subsequent federal policy is to overall economic prosperity, some of the most consequential programs and legislation to spur entrepreneurship — and the jobs that come with it — continue to happen at a more local level.

I have written and spoken extensively about Revolution’s Rise of the Rest bus tours — our effort to explore how cities across the U.S. are encouraging the development of startup ecosystems.

Most of the time I focus on the incredible startup founders I meet along the way. The talent that exists in every pocket of this country consistently blows me away — talent that starts new enterprises and creates innovations that change the way we live and work. Startups are also responsible for all net new job creation in this country, so each founder brings the additional potential to change lives and communities through employment opportunities.

But, while talent is evenly dispersed, opportunity is not. 78 percent of venture capital went to just three states last year: California, New York, and Massachusetts.

And, while federal policy can create strong incentives for startup growth, often it is city and state officials that are creating an environment in which startups can thrive.

Here’s how:

First, they help create network density. In Silicon Valley, the volume and concentration of individuals who have a stake or interest in startups creates numerous opportunities for founders to connect with the right people to help grow their businesses. This just doesn’t fully exist in other cities.

On our Rise of the Rest visits, I am frequently surprised when our bus tour presents the first opportunity for founders of emerging companies to connect with one another.

Recognizing the promise of a strong tech ecosystem, cities have endeavored to bring the tech community together at accelerators, incubators and coworking spaces.

For example, in Phoenix, the mayor’s office launched the city’s first business incubator, hive@central, alongside the Phoenix Public Library with support from Arizona State University.

The hive offers hundreds of free programs as well access to mentors and networking events. Similarly, the Armory, launched by the city and Parallel Capital Partners, offers co-working space and other tools for veterans who are looking to launch or scale startups. These kinds of efforts create the support and connections entrepreneurs need to effectively launch and grow a high growth business. 

Second, local government is facilitating capital. It is undoubtedly more difficult to attract capital if you are not in a tech hub and that goes for both startups and regional funds (of which we are starting to see more).

I met with the head of a regional fund who told me it took more than 400 meetings to raise $30M. Federal programs to incentivize the deployment of capital to areas starved for innovation could have a significant impact — that’s why I’m supportive of the bipartisan Investing in Opportunity Act.

But state and local programs are important as well, and they are making a real difference in many regions right now. Invest Nebraska, a public-private partnership that arose from state legislation, is investing more than $5M annually in Nebraska-based startups.

In Kansas City, a new program dubbed KCInvestED, provides investors with information about early-stage opportunities. This unlocks capital to help founders stay and grow their businesses in the Kansas City region.

Finally, just last year, Tennessee passed the Angel Tax Credit to create incentives for angels to invest in local startups. After decades of regional economic development focusing on luring headquarters or factories (usually at great cost), it is great to see governors and mayors recognizing the best — and most sustainable — approach to creating jobs and driving growth is to invest in startups, some of which could become the big Fortune 500 companies of tomorrow.

Lastly, city and state officials are working to attract and retain talent. After more than a decade, the brain drain to the coasts is starting to slow and some cities are even starting to see the early signs of a talent boomerang. Driven by rising costs of living in coastal cities, some people are returning to hometowns and cities where they previously lived or went to school.

But there is much that must be done to accelerate this trend. Part of the solution involves raising awareness. In Mount Pleasant, South Carolina (just outside of Charleston), they host the DIG SOUTH interactive conference each April, bringing Vox Media, Buzzfeed and CNN to meet their most promising startups.

And Denver creates and markets a list called the “Denver Gazelles” to showcase the city’s rapidly growing startups with the greatest potential for raising funds and creating jobs. Mayors and governors also play an important role as champions of entrepreneurs, creating a culture that encourages risk-taking and evangelizing the emerging startup success so their localities can become even more of a magnet for talent and capital.

President Trump rode a wave of populism to the White House and voters in places like Beattyville expect him to produce economic growth and real jobs.

I hope his administration views startups and entrepreneurial growth as key tools to achieve those goals. In the meantime, I am comforted by the fact that city and state leaders across the country have started taking up the challenge. Now it’s time to celebrate  and replicate their efforts.

Steve Case, a co-founder of America Online, is chairman and chief executive of Revolution and author of “The Third Wave: An Entrepreneur’s Vision of the Future.”

The views of contributors are their own and are not the views of The Hill.